President Trump has been a boon to the U.S. oil and gas industry since he took office last January, but his tough stance on trade in the past month threatens to reverse the substantial progress that’s been made.

Make no mistake, Trump’s tariffs on foreign steel and escalating trade tensions with China put America’s surging energy sector at risk. Tough trade talk may play well with the president’s Rust Belt voter base, but his protectionist actions are making the oil industry – not to mention agriculture and others – less competitive against OPEC at a time when there’s a golden opportunity to further erode the cartel’s influence over prices.

Trump’s 25% tariff on imported steel and 10% tariff on aluminum imports is already driving up costs across the supply chain – from drilling to installing wellheads to building pipelines. My company, Canary LLC, one of the nation’s largest privately-owned oilfield services contractors, saw an almost immediate 20% increase in the cost of steel when the tariffs were announced. Canary spends roughly $10 million a year on imported steel to make wellhead and pressure control equipment, valves and other apparatus used by oil companies in the exploration and production process. The economic consequences of a trade war are a real threat to our employees just as they were starting to see the benefits of the president’s other policies. Higher supply costs could force us to lay off as much as 17% of Canary’s staff of 300 employees.

It’s not just Canary. The entire domestic oil sector is spooked by the president’s tariff talk – even though the Trump administration quickly announced there would be exclusions to the tariffs. The American Petroleum Institute, the top trade group for the U.S. oil industry, has called the policy “inconsistent with the administration’s goal of continuing the energy renaissance and building world-class infrastructure.” API leaders said the president’s trade policies would create “confusion in supply chains, unnecessary costs and impacts to U.S. capital-intensive projects,” while threatening high-paying industry jobs.

Put simply, U.S.-based oil and gas steel fabricators have more to lose than their Chinese counterparts in a trade war. With U.S. oil production at a record high of roughly 10.5 million barrels a day, America has put OPEC in a most unfortunate position. To accommodate surging U.S. oil, the cartel and some non-OPEC partners, led by Russia, have slashed their own production to bolster prices, effectively subsidizing America’s oil boom by allowing U.S. producers to seize market share.

OPEC and Russia are very much on their heels. No emerging market is more important to the oil industry than China, the world’s biggest driver of demand growth, and the United States has been making sizable inroads into China's oil and gas markets. China last year usurped America as the world’s largest importer of oil, and this is not a market that U.S. oil exporters can afford to lose. Chinese imports of U.S. oil recently hit a record of nearly 500,000 barrels a day. Annualized at an average price of $60 a barrel, those exports are worth nearly $11 billion in trade. In 2017, Bloomberg Intelligence estimated America exported 1.5 million tons of liquefied natural gas to China at a value of about $644 million.

Before the trade tensions, China was giving every indication that it intended to ramp up its purchase of supplies of U.S. energy in its ongoing campaign to diversify away from OPEC and Russia. Now, Beijing’s political calculations could see it turn back to OPEC suppliers – or closer to home with renewed investment in Mexico and Venezuela; America's doorstep. Another possible consequence, if the Trump administration re-imposes sanctions on Iran by walking away from its nuclear deal with Tehran next month, the Islamic Republic may try to make up for the loss of European oil customers by offering discounts to China.

Beyond China, the International Energy Agency has warned that a trade war would have “strong consequences” for global oil demand, particularly for fuel used in the maritime sector and in trucking. This was evident in the recent pullback in oil prices to below $70 a barrel, which most chalked up to Trump’s early March tariff announcements and China’s swift reaction.

Despite all of these concerns, oil prices have rebounded, mainly due to mounting geopolitical tensions. With the increased risk of conflict in the Middle East, Venezuela’s continuing slow meltdown, the likelihood of renewed sanctions against Iran, and broader talk of a looming oil supply gap in coming years because of low global investment, though, this is no time for President Trump to handicap America’s oil sector – and the nation’s entire economy. The administration must stay focused on the massive energy opportunity at hand for America. And that opportunity increasingly will rely on free trade as the United States becomes the dominant player on the global energy export scene.